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President Donald Trump\u2019s bid to put home ownership in reach for more Americans is sputtering, just weeks after it launched.\u00a0<\/p>\n
With voters signaling that pocketbook issues are top-of-mind ahead of the November midterm elections, the White House has floated a series of\u00a0trial balloons\u00a0aimed at lowering the cost of buying a home, only to see several shot down by Congress, the financial industry or even Trump himself.\u00a0<\/p>\n
The result: About\u00a0six weeks\u00a0after he promised \u201csome of the most aggressive housing reform plans in American history,\u201d the administration has struggled to get new policies in place while mortgage rates recently inched higher. Trump acknowledged the corner he\u2019s painted himself into, waffling about the very idea of bringing down housing costs if it means existing homeowners get hurt.<\/p>\n
\u201cWe\u2019re not going to destroy the value of their homes so somebody who didn\u2019t work very hard can buy a home,\u201d he said at a cabinet meeting Thursday.<\/p>\n
Trump\u2019s inertia on the issue comes as a majority of Americans say he isn\u2019t doing enough to address their broader cost-of-living concerns. A January\u00a0CNN-SSRS poll\u00a0showed that 64% of respondents said Trump hasn\u2019t gone far enough in trying to reduce the price of everyday goods. A\u00a0New York Times\/Siena poll\u00a0found that 51% of registered voters think Trump\u2019s policies have made life less affordable, compared with 24% who think they\u2019ve made life more affordable.\u00a0<\/p>\n
Housing is a particular sore spot for many Americans.\u00a0<\/p>\n
Home prices were up more than 50% from before the pandemic as of Nov. 30, according to the latest reading of the Case-Shiller National Home Price Index. Rents increased by about 35% over that period, according to Zillow, while the median age of first-time home buyers has risen to a record\u00a040 years old,\u00a0according to the National Association of Realtors.<\/p>\n
Trump, meanwhile, has repeatedly gotten sidetracked, failing to tout the affordability proposals the White House signaled would form a central plank of his messaging heading toward November.\u00a0<\/p>\n
Read:\u00a0Trump Keeps Trashing Cost-of-Living Message His Team Is Pushing<\/p>\n
Before the president\u2019s\u00a0appearance this month\u00a0at the World Economic Forum in Davos, Switzerland, aides had pitched his speech as an opportunity to expand on his plans. While Trump mentioned a few previously announced proposals, he didn\u2019t offer fresh details and the speech was swallowed up by his\u00a0remarks on Greenland.\u00a0<\/p>\n
Similarly, at a rally this week in Iowa \u2014 a key battleground in the November election \u2014 Trump failed to mention several of the affordability proposals at all.<\/p>\n
He also directly panned one of his administration\u2019s ideas to help Americans afford a home. After National Economic Council Director Kevin Hassett touted a\u00a0forthcoming plan\u00a0to let workers tap tax-advantaged accounts to fund down payments, the president told reporters, \u201cI\u2019m not a huge fan \u2013 other people like it.\u201d People should leave their money in the market, he said.\u00a0<\/p>\n
The policies he does still support are ones he may have little power to enact.\u00a0<\/p>\n
Trump\u00a0signed an executive order\u00a0Jan. 20 designed to curb large institutional investors\u2019 purchases of single-family homes. But the order is relatively toothless: It leaves it to Treasury to determine what counts as a large investor while urging Congress to pass legislation banning such sales.\u00a0<\/p>\n
Even if Congress carried out the request, it\u2019s not clear how much impact such a move could have on prices. Larger institutional investors own less than 1% of the nation\u2019s single-family housing stock, and just between 2% and 3% of its single-family rentals.<\/p>\n
It\u2019s not just housing policies that seem adrift.\u00a0<\/p>\n
House Speaker Mike Johnson dismissed a proposal Trump floated in a\u00a0social media post\u00a0to cap credit card interest rates at 10% for a year as an \u201cout of the box\u201d idea that shouldn\u2019t be taken seriously. JPMorgan Chase & Co. CEO Jamie Dimon said the cap would spell\u00a0\u201ceconomic disaster.\u201dIt\u2019s been little discussed since.\u00a0<\/p>\n
One move the administration announced that does appear to be\u00a0underway\u00a0is a plan to have Fannie Mae and Freddie Mac, the government-controlled companies underpinning the mortgage market, buy as much as $200 billion in mortgage bonds.<\/p>\n
There are roughly $9 trillion worth of agency mortgage bonds outstanding, so if Fannie and Freddie carry out all the purchases it would amount to just over 2% of the market. The move could lower mortgage rates as much as 25 basis points, or 0.25 percentage point, according to analysts. The\u00a0current rate\u00a0on a 30-year fixed loan is 6.1%, according to Freddie Mac.\u00a0<\/p>\n
That might not be enough.\u00a0<\/p>\n
\u201cIf the expected effect of this is rates will come down 25 basis points, that\u2019s not a needle-mover,\u201d said Ed DeMarco, president of the Housing Policy Council and former acting director of the Federal Housing Finance Agency from 2009 to 2014.\u00a0<\/p>\n
Current FHFA Director Bill Pulte last week dismissed an\u00a0AP report\u00a0that the companies had been given a green light to expand their mortgage-backed security purchases in order to have a bigger effect on the market. In\u00a0a post on X, he said \u201cthe combined incremental total MBS buy will not exceed $200 billion.\u201d\u00a0<\/p>\n
But keeping the purchases capped means mortgage spreads will widen once the spending stops, according to Jim Parrott, a nonresident fellow at the Urban Institute, who said the move \u201cwill only impact the cost of a mortgage as long as investors believe the extra demand will be there.\u201d<\/p>\n
After the funding is spent, \u201cthe administration will have to decide if they want to spend another $200 billion to keep prices down for longer,\u201d he added. \u201cIt may be hard for them to stop.\u201d<\/p>\n<\/div>\n
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